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Budget Bloodbath: An overview of the Alberta budget 2013

Mar 13, 2013

As talk of a bursting “bitumen bubble” grows, the 2013 Alberta budget holds mixed news for the province’s stakeholders.

An operational expense estimate that’s flatlined at $36.4 billion has left the government with little flexibility to provide necessary funding increases to post-secondary institutions. A decade of average annual expense increases of 7.3 per cent juxtaposes 2013’s sudden zero per cent increase.

This year, that 7.3 per cent would have added approximately $2.66 billion to the expense budget — a number the government has had to make up for in cuts by reneging on some of last year’s budgetary promises.

With 83 per cent of the Alberta budget going to only four ministries — Advanced Education, Education, Health Care and Human Resources — government officials say the decision came down to cutting into the budgets of these four or eliminating all other ministries in order to meet budgetary targets.

For post-secondary education, governed by the Ministry of Enterprise and Advanced Education and funded by a block grant called the Campus Alberta Grant, the 2012 Budget promised institutions a two per cent increase each year over a three-year span — a reprieve after years of zero per cent increases.

That two per cent was still not enough for the University of Alberta, which needs an annual four per cent increase to break even due to inflation.

In March 7’s provincial budget release, the two per cent increase was slashed down to a decrease of 7.2 per cent — an approximately $43 million cut to a $550 million institutional budget.
This 7.2 per cent is in addition to a $12 million structural deficit, representing an additional two per cent decrease.

As the university begins to use the term “cuts” for the first time, speculation is flying about what exactly will be cut and how the changes will affect students.

Effects on Students

University of Alberta students remain on edge, awaiting news of how the 7.2 per cent cut to the institution’s budget will impact the quality and accessibility of their education.

Program cuts, research funding, staff salaries and mandatory non-instructional fees will all be up for debate in the coming weeks as the May 31 deadline approaches for the university to submit an action plan to the government.

President Indira Samarasekera has already said the cuts will have a direct impact on the U of A’s quality, and that the administration will be faced with difficult decisions.

“All of the assistance we provide students are going to (be) on the block,” she said immediately following the budget release. “Quite frankly, there’s going to be a very significant reduction in quality of the student experience.”

Students’ Union President Colten Yamagishi said he hopes to put pressure on the university to avoid raising costs for students.

“We’re hoping there will be no move for tuition increases, mandatory non-instructional fees or market modifiers coming in the future,” he said.

“The government has made it really clear that they will not allow a tuition increase, so I think that could be a serious point of contention between the university and the government.”

SU Vice-President (External) Petros Kusmu echoed Yamagishi’s sentiments, but also blasted the government for not investing in the U of A at a critical point in the province’s economy.

“If we’re talking about feasibility, how is it feasible to cut the very same thing that’s going to stimulate your own economy?” he said.

“We’re talking about economic diversification. We’re talking about bringing in more labour to Alberta. We’re talking about just making Alberta a better place. Post-secondary education does that,” he added.

The Comprehensive Institutional Plan

Among top concerns at the U of A is the fate of the 2013-14 Comprehensive Institutional Plan (CIP), which had already been drafted but will now require extensive revisions in the wake of the budget cut.

The current draft was based on last year’s promised two per cent increase, and administration has criticized the government for failing to provide sufficient warning that severe cuts were imminent.

“I was horrified, because they could have given us some warning,” Samarasekera said following the budget’s release on March 7. “We’ve been asking for about two months, ‘Give us some numbers so we can plan.’ ”

Deputy Premier and Minister of Enterprise and Advanced Education Thomas Lukaszuk said post-secondary institutions had been warned to the fullest extent possible.

“I (had) spoken with all the presidents on at least two occasions, giving them a warning that there will be significant changes,” he said. “I guess my definition of ‘significant changes’ and theirs must have differed a little.”

Samarasekera’s Feb. 28 State of the University address revealed the university was conscious of approaching budget cuts, albeit not to the extent delivered by the government. She did not explain why the CIP draft did not take these expectations into account.

“We now know that the promised two per cent increase to the Campus Alberta grant is in jeopardy — serious jeopardy,” she cautioned at the time.

“If, on March 7, we receive news of a decrease to the planned two per cent increase, we will have to completely revise our plans.”

Administrative Plans

Decisions may still be in their preliminary stages, but the big question in many university students’ minds is “What will the administration do next?”

While the U of A prepares to batten down the hatches, members of the community are in uproar.

U of A professor Jeremy Richard’s Whither The U of A? blog calls for the government to be voted out of office for “failing its population so spectacularly.” He adds a mass resignation from the U of A’s Board of Governors would send a clear message. Meanwhile, students are organizing marches to the Legislature.

However, upper administration is approaching the situation with somewhat cooler heads.

“We are not going to run around with our hair on fire,” Samarasekera said Friday.

“(This is) going to require us to look very strategically at programs, services, everything across the institution with the view to strengthening the institution, not weakening it.”

Now that the university’s Comprehensive Institutional Plan has been delayed until May 31, there’s a window of opportunity for administration to have at least some time to discuss cuts.

As of a March 11 news release, the university announced that previously planned 1.5 per cent across-the-board cuts to all units and faculties will be implemented. Additionally, immediate restrictions have been placed on travel budgets supported by operating funds or provincial funding.

And the university isn’t the only institution tightening its belt. Lukaszuk is facing a 3.6 per cent to his own ministry, which he says will result in a cut of approximately 10 per cent of the ministry’s middle management staff over the next few years.

“We have 26 schools that have to go through (these cuts), but I am also putting myself through it — you can’t lead and not lead by example,” he said.

“Right now, I couldn’t look you straight in the eyes and tell you that we are delivering (education) most efficiently.”

On the student side, Yamagishi fears plans for market modifier proposals could be in the works to deal with the cuts.

“Is it the right thing to do? Absolutely not, but they’re in a tight bind right now,” he said.

“I think we really need to start taking a look at administrative and academic staff wages, because they’re looking at a four per cent increase every year and it’s tough to provide four per cent when you’re getting minus 6.8.”

Mandate Letters

In an effort to guide Alberta schools through the worst of the cuts, Lukaszuk has announced he will be sending mandate letters to the leaders of all 26 post-secondary education institutions in the province. The letters will seek out opportunities for increased inter-school collaboration.

“I will be compelling schools to start working together,” he said.

“We will develop a working group of all leaders of all institutions, and we will be identifying all the areas where collaboration can be found, where efficiencies can be found. And then my Ministry will be coordinating it.”

Lukaszuk mentioned the current lack of credit transferability between Alberta institutions as a problem, and said increased portability will eventually save students, taxpayers and post-secondary institutions money.

“A student moving from the University of Lethbridge to the University of Alberta will not have all her credits recognized in the same province,” he said.

“Two schools paid for by the same taxpayers, and now she has to take five or six courses all over again because credits don’t transfer. That’s ridiculous ... Why does it have to be that way?”

Although most stakeholders are reserving judgment until closer examination, the mandate letters have some student leaders wary that the elimination of duplicated programs will negatively impact Alberta students — particularly those from rural or Aboriginal communities.

Yamagishi said although the letters may prove helpful to Alberta post-secondary schools, at this point leaders can only speculate about what their contents will entail.

“It really depends on what the conditions are. I don’t disagree with them trying to provide direction, but I haven’t taken a look at the letter myself, so until I saw what’s in it, that would be a big factor in whether I think it’s a good idea or not,” he said.

Alberta Students’ Executive Council (ASEC) chair Matthew Armstrong said the mandate letters’ emphasis on inter-school collaboration could ultimately have a positive effect on Alberta post-secondary
students.

“We represent all five public sectors of students. We represent everyone from colleges, polytechnics, universities, grads and undergrads, and for us that’s really good,” he said. “If we can find a way to increase transferability and mobility, it’s only going to be positive for Alberta, and it’s only going to be positive for students.”

Lukaszuk emphasized the value of new opportunities for increased collaboration and reorganization within Alberta’s post-secondary education system, despite the apparent severity of the funding losses.
“We often don’t think of students as customers, but you are. You’re paying for a service: you want to get the best education possible, the most relevant education possible, at the least cost,” he said.

Projection for Students

But while the university gears up to weather the storm, there is a genuine fear that students will be left out in the rain.

Despite Alberta Premier Alison Redford’s statements that post-secondary tuition will not go up while she is in office, the provincial tuition cap certainly holds back a great deal of revenue the university could otherwise use.

In particular, Samarasekera has discussed graduate tuition as a possible area to review.

“We need to invest more in (our) professional programs to give them a much higher quality,” she said.

“Then the increased tuition that we should be allowed to charge is invested in scholarships so that students who would not otherwise be able to attend law school could attend — same with business school,” she continued.

“Right now, we’re subsidizing everybody, and I don’t think that’s good public policy.”

But tuition is not the only thing on the table.

Immediately following the release of the budget, Samarasekera said students will need to make peace with the possibility of not having access to the classes or services they expected.

“There’s going to be a very significant reduction in quality of the student experience — it’s quality that’s on the chopping block today, not access,” she said.

But Lukaszuk says he’s made a commitment to encourage post secondaries not to interfere with tuition, mandatory non-instructional fees and market modifiers.

He’s also talked about unprecedented, across-the-board changes for the province’s 26 post-secondary institutions.

The biggest of these changes has raised concerns that entire programs and departments could be slashed — a dramatic but not wholly unprecedented fear, with the provincial government trying to eliminate what it refers to as “inefficiencies.”

“Why is it that we have a number of schools in Alberta that offer, for example, Bachelor of Education degrees, and each one of them, at their own expense, developed its own curriculum? If it’s good for the U of A, why can’t the U of C use that curriculum?” Lukaszuk questioned.

“Why is the U of A offering an MBA program in Calgary, when the University of Calgary already has an MBA program? … There are dozens and dozens of these examples where greater collaboration could be achieved.”

But students don’t need to worry that program slashes will mean they can’t finish a degree. Lukaszuk says anyone currently enrolled in a program of study will be able to complete it.

“Some find it unbelievable, but I think that having to go through this process can actually allow us to identify ways to improve the service to our students,” he said.

“In a province of four million … we have 26 schools that operate totally independently of each other, with very little collaboration. That’s just not acceptable, and it shouldn’t be acceptable to students.”

Lukaszuk also addressed the issue of the student voice, noting that different Students’ Unions have varying degrees of advocacy within their respective institutions.

“One thing I will be doing is standardizing the role of student bodies in the decision-making processes in post-secondary education and making it more real, more meaningful,” he said.

“Students will get to voice their concerns, and then vote against (increases).”

Student Financial Aid

While the overall news may be bad for the university, students who require financial aid don’t need to be concerned about the government cutting their funding.

The Alberta Budget 2013 has set aside $425 million in student loans — an increase of 21 per cent — to go to more than 58,000 students over the next year.

Additionally, Student Aid programs are sitting at $211 million — a number which includes $71 million for merit-based scholarships to around 38,000 students, $59 million for bursaries and grants to about 18,000 students, $42 million for student debt management programs and $11 million for Alberta Centennial Education Savings Plan grants.

However, Kusmu says what the government is touting as the “most generous scholarship program in Canada” is actually nothing to brag about.

“It was only four years ago that we had $90 million more in scholarship, grants, bursaries (and) loan relief programs,” he said. “That’s the span of the average student’s (undergraduate career).”

The budget also includes a new grant for low-income students, but Kusmu says from his understanding that grant is extremely small.

“I couldn’t care less that you can boast about how much you give in scholarships. Unless our post-secondary education participation rate is good, unless we’re finding those from lower, underrepresented backgrounds being in post-secondary education, then let’s not boast about that,” he said.

“The very same thing (the government) is cutting is the same thing that’s going to stimulate our own economy, is going to get (us) out of this economic rut.”

The Future of the Student Temporary Employment Program

One of the biggest blows to Alberta university students so far has been the suspension of the Student Temporary Employment Program (STEP), a $7 million program that employs 3,000 post-secondary students in full-time summer jobs each year.

This program cut will make Alberta the only province in Canada without a student work program.

Yamagishi called the suspension of STEP upsetting, saying the benefits of the program — not just to students, but to the province — far outweigh the expenses.

“When we look at cutting a program that’s $7 million while we’re building $300 million buildings — it’s just a drop in the bucket for a fantastic program that was giving students the ability to acquire their skills in a summer program,” he said.

“Students who work in libraries, museums, public centres in the summer — the contribution they make is worth so much more than the $1,000 stipend they’re getting from STEP.”

However, Lukaszuk argued STEP is an unnecessary expense at a time when the province has a labour shortage.

“Right now, our employers are strapped for workers. They’re paying big bucks to bring workers from foreign countries just to make their businesses move along,” he said.

“We don’t need to entice employers to hire students. Employers simply will hire them because they need them.”

Many post-secondary students have countered that although it’s true the province has a labour shortage, students will likely be hired only for low-paying, low-skill jobs, whereas STEP would have helped them find employment closer to their fields of study.

Incoming SU Vice-President (External) Adam Woods pointed out that the lack of a student employment program could result in a flooding of the job market over the summer as students scramble to find employment.

“It’s not easy to find a summer job that employs you for four months at 40 hours a week, and it’s something that this program did,” he said.

“So that’s 3,000 full-time jobs gone, and it means that there’s going to be 3,000 more students that are looking for a job, and that’s not a good thing for our market.”

In a message, Minister of Human Services Dave Hancock stated that the suspension of STEP had been a difficult decision, but the government had ultimately prioritized the funding needs of vulnerable Albertans over those of students seeking employment.

“We realize that STEP has provided an opportunity to introduce young people to careers in the (non-profit and voluntary sector),” he said.

“We will work with you to see how we can enhance opportunities in this area as we work to strengthen wage supports to stabilize the existing workforce, and make careers in the NPVS more financially viable.”

Conclusion

The Alberta Budget 2013 holds some significant changes for students. Despite assurances from the government, students still worry tuition increases are in the future.

As the university faces down a potential province-wide transformation of post-secondary education and increasing direct interference from the government, it must also deal with dissenting internal factions as it makes the tough decisions necessary to balance its budget.

But there are key players yet to provide input on the situation. The university’s somewhat contentious Renaissance Committee, Umbrella Committee and Administrative Innovation and Process Review (AIPR) Task Force are all mandated to find ways to help with the situation — whether that means finding cuts, eliminating inefficiencies or reducing costs through other means.

Additionally, the university is being open with the campus community about what cuts might entail. The recently-launched Change@UAlberta website gives a comprehensive look at how the university is handling the cutbacks, and continues to provide running updates on the fiscal situation.

Mandate letters will be received in the next few weeks, and from there it will be impossible to predict the outcome of this year’s financial bloodbath — at least until the CIP and institutional budget are released on May 31.

But despite all the uncertainty, a few things are for sure.

First, this year’s budget heralds a wave of change to Alberta’s post-secondary landscape — a change that might just undercut the U of A’s goal of rising to the top. Second, the province’s 26 institutions will move closer to becoming a cohesive whole, sharing resources and possibly programs. And lastly, no matter what happens to the CIP, students will feel the burden of this year’s cuts above anyone else.

Comments

I looked at the Journal and the Herald, the Sun and the Globe, and even at the other school papers, and this article is THE BEST and most SOPHISTICATED ANALYSIS of the budgetary impact on post-secondary education I have found.
Kudos!
And I intend to share this with others too. I encourage you all to do so as well.

Posted by PJ on Mar 13, 2013

I agree with PJ - this is a really good analysis. Sadly, the analysis is very disconcerting in its accuracy. It is especially appalling that the Minister of Human Services would pit students against “vulnerable Albertans”. We all lose when false dichotomies prevail and we are all certainly vulnerable to this faulty logic here in Alberta these days.

Posted by Margaret Holliston on Mar 19, 2013

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